Oil futures lost ground Friday, following equities lower, as traders absorbed fresh discouraging economic data and re-focused on weak signals for petroleum demand.
The U.S. Commerce Department reported Friday that average American incomes fell 0.1% in August, the first decline in nearly two years. The Dow Jones Industrial Average was down 147 points to 11,006 shortly after the market's open.
Light, sweet crude for November delivery dropped more than 2% and threatened to break through the psychologically important $80 a barrel level before bouncing back. Futures prices were down $1.64, or 2%, to $80.50 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange was down $1.80, or 1.6%, to $102.15 a barrel.
Oil futures rose Thursday, despite an afternoon report from the Department of Energy showing U.S. oil demand in July fell to its lowest level since 1996. Though the market seemed to take it in stride at the time, traders said it was commanding fresh attention on Friday.
"It's more of the same really, in terms of the growing concerns over the economy," said John Kilduff, the founding partner of asset manager Again Capital. "Demand is down appreciably. That speaks to a deteriorating environment, and I think we're going to see more of that, not less."
In a research note, Citi Futures Perspective analyst Timothy Evans called the figures "shocking" and said half the decline in the demand data "points to economic weakness."
Front-month October reformulated gasoline blendstock, or RBOB, recently traded down 3.02 cents, or 1.2%, to $2.5890 a gallon. October heating oil fell 3.31 cents, or 1.2%, to $2.7850 a gallon.